Term vs. Whole life insurance: Which is more suitable for you?

Life insurance is essential for your well-being as well as that of your family. In case of unexpected circumstances, life insurance makes things easy. If something were to happen to you, it ensures that your dependents do not suffer. Life insurance replaces your income in case of your death. Moreover, life insurance also covers the cost of debts and other expenses in such an instance. Hence, life insurance can provide you a lot of benefits.

There are two basic types of insurance. These are explained in detail as follows:

Term Life Insurance

Term life insurance is only available for a particular amount of time. Also, it is more economical. The insurance offers death benefits (in case of your death) to your beneficiary. As the name suggests, term life insurance lasts for five years, twenty years, and thirty years. After this period, life insurance ends. The premiums offered in term life insurance are affordable.

Various factors determine the premiums, including age, health, life expectancy, etc. The policyholder is required to pay the premiums regularly. If the person dies before the time period of the insurance runs out, the insurance company pays the amount. If the insurance runs out, the person does not receive any money. However, the person can renew the insurance policy.

Whole Life Insurance

Whole life insurance provides lifelong protection and offers guaranteed benefits in case of death. However, the insurance has a higher cost of premiums while offering the same death benefits. In whole life insurance, the premiums are fixed and do not change even with the changing market trends. It also means that you receive fixed death benefits as well. You can also take out loans from your insurance policy.

This type of life insurance also offers a saving option, allowing policyholders to save money. The cash value grows over time. You can even take out the cash value to fund your insurance policy.

Which one should you choose?

There are several differences between term life insurance and whole life insurance.

Affordable

Term life insurance is suitable for most people because it is more affordable. Whole life insurance is more expensive than term life insurance. Hence, most people seek term life insurance.

Investment

In whole life insurance, the policyholder has the opportunity to invest. The cash value grows with time, which means that you end up investing in insurance. The same is not true for term life insurance because you only get the money in case of death.

Premiums

The premiums for whole life insurance stay level for the duration of a person’s life. However, the premiums for term life insurance may either stay the same or increase with time.

Surrendering life insurance

People who purchase whole life insurance tend to return it because of the high cost. The surrender value may also change with time. With term life insurance, policyholders can return it any time they want.

Conclusion

The life insurance Singapore policy you choose depends on various factors. Affordability is the most important factor. Hence, consider the various options before you choose one that is right for you.